AKBA scheduled a $76 million IPO with a market capitalization of $283 million at a price range midpoint of $15.50 for Thursday, March 20, 2014 on the Nasdaq.

Summary

AKBA is a biopharmaceutical company focused on the development of novel proprietary therapeutics based on hypoxia inducible factor, or HIF, biology and the commercialization of these products for patients with kidney disease.

HIF is the primary regulator of the production of red blood cells, or RBCs, in the body and a potentially novel mechanism of treating anemia.

Valuation

Conclusion

AKBA’s lead product candidate, AKB-6548, is being developed as a once-daily oral therapy that has successfully completed a Phase 2a proof of concept study.

The study demonstrated that AKB-6548 safely and predictably raised hemoglobin levels in patients with anemia secondary to chronic kidney disease, or CKD, not requiring dialysis.

The rating on AKBA is positive.

Business

AKBA is a biopharmaceutical company focused on the development of novel proprietary therapeutics based on hypoxia inducible factor, or HIF, biology and the commercialization of these products for patients with kidney disease.

HIF is the primary regulator of the production of red blood cells, or RBCs, in the body and a potentially novel mechanism of treating anemia.

Lead product candidate

AKBA’s lead product candidate, AKB-6548, is being developed as a once-daily oral therapy that has successfully completed a Phase 2a proof of concept study demonstrating that AKB-6548 safely and predictably raised hemoglobin levels in patients with anemia secondary to chronic kidney disease, or CKD, not requiring dialysis.

More than 30 million people in the United States have CKD, with estimates that over 1.8 million of these patients suffer from anemia.

Oral not injectable

AKB-6548 works by a differentiated mechanism of action that AKBA believes has the potential to be safer than that of injectable rESAs. This novel mechanism of action is referred to as HIF prolyl-hydroxylase, or HIF-PH, inhibition.

Instead of binding directly to the EPO receptors on cells in the bone marrow, AKB-6548 leads to activation of critical pathways for hemoglobin and RBC production. This approach mimics the physiological adjustment made by the body when exposed to reduced oxygen levels at higher altitudes.

Trials

To date, AKB-6548 has been studied in eight clinical trials across four separate patient populations: healthy volunteers and patients with CKD stages 3, 4 and 5 (non-dialysis).

The largest study was a Phase 2a trial in 91 patients with anemia secondary to CKD, which showed significantly increased hemoglobin levels among subjects taking AKB-6548 compared to baseline in a dose-dependent manner across all treatment arms (p < 0.0001).

No drug-related serious adverse events were reported, and dosing was well-tolerated. In addition, AKB-6548 was also shown to stabilize the iron supply to the bone marrow while improving hemoglobin production.

AKBA is conducting a Phase 2b trial for AKB-6548 in patients with anemia secondary to CKD who are not dependent on dialysis and expect data to be available in the fourth quarter of 2014.

AKBA has also initiated a development program for patients dependent on dialysis. If the results of its Phase 2b trial are positive, AKBA would expect to initiate Phase 3 trials for anemia secondary to CKD in 2015, and would anticipate submitting an NDA for AKB-6548 in the United States by 2018 if the Phase 3 data are favorable.

Rights

AKBA owns worldwide rights to its HIF-based product candidates, including AKB-6548. If approved by regulatory authorities, AKBA plans to commercialize AKB-6548 in the United States itself and intends to seek one or more collaborators to commercialize the product candidate in additional markets.

History

Since its inception in 2007, AKBA has devoted substantially all of its resources to its development efforts relating to AKB-6548, including preparing for and conducting clinical studies of AKB-6548, providing general and administrative support for these operations, and protecting its intellectual property.

AKBA does not have any products approved for sale and has not generated any revenue from product sales. AKBA has funded its operations primarily through the private placement of preferred stock, common stock, and convertible notes.

Dividend Policy

No dividends are planned.

Intellectual Property

AKBA’s patent estate, on a worldwide basis, includes 19 allowed applications and issued patents and approximately 39 pending utility and provisional patent applications, with pending and issued claims relating to its current clinical stage candidate AKB-6548 as well as other product candidates, including AKB-6899.

AKBA also holds three patents that claim the crystal of a protein-ligand complex of EGLN-1 as well as methods for identifying compounds that bind to EGLN-1.

Competition

If AKB-6548 is approved and launched commercially, competing drugs will include EPOGEN and potentially Aranesp, which are both marketed by Amgen, Inc, in addition to Procrit and Eprex, which are marketed by Johnson & Johnson.

Aranesp, introduced in 2001, has significant market share in the United States, particularly in the oncology and the non-dialysis markets, although it is approved for treatment in dialysis patients as well. In Europe, Roche has obtained regulatory approval to market, and has launched, a PEGylated rESA called Mircera. Mircera reportedly has greater plasma stability than any of the currently marketed products.

PEGis a polymer that increases the time rEPO remains in the circulation and consequently can be dosed less frequently.

5% stockholders

Novartis Bioventures Ltd.: 23.9%

Venture Investors Early Stage Fund IV: 11.0%

Trusts and Other Entities Affiliated with Muneer A. Satter: 10.7%

KearnyVenture Partners, L.P. and related funds: 9.9%

Novo A/S: 9.9%

Triathlon Medical Ventures: 8.3%

Use of proceeds

AKBA expects to net $68 million from its IPO. Proceeds are allocated as follows: $50 million to continue clinical development of AKB-6548 in patients with anemia secondary to CKD, including the preparation for and initiation of the Phase 3 trials; $10 million to conduct a Phase 2 clinical trial of AKB-6548 in idiopathic anemia of aging; $5 million to advance its preclinical candidate, AKB-6899, through Phase 1 development in oncology; and the remainder for working capital and other general corporate purposes.

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